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NBS Report: Web of Alternative Forex Blocks Economic Recovery- Otunuga

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Lukman Otunuga, an economic expert with penchant in the currency market, has rued that Nigeria’s web of alternative foreign exchanges remains a major stumbling block to a sustainable economic recovery while also effectively repelling FDI.

Otunuga, a research analyst at FXTM was reacting to a detailed data released from the National Bureau of Statistics, in the fourth quarter of 2016, showing the nation’s Gross Domestic Product (GDP) contracted by -1.30 per cent (year-on-year) in real terms, from N18,533.75 billion in Q4 2015 to N18,292.95 billion in Q4 2016.

He aligned with the school of thought that the Gross Domestic Product (GDP) of the Nigerian economy has continued to dwindle due to factors ranging from weaker inflation, induced consumption demand, an increase in pipeline vandalism, significant reduced foreign reserves and a concomitantly weaker currency and problems in the energy sector such as fuel shortages and lower electricity generation.

According to Otunuga, “Nigeria’s full-year economic contraction of -1.5% for 2016 continues to highlight how the terrible combination of depressed oil prices, foreign exchange shortages and overall sluggish economic fundamentals have exposed the nation to downside shocks”.

Meanwhile, the NBS report shows the decline was less severe than the decline recorded in the previous quarter, of -2.24 per cent, but was nevertheless lower than the growth rate recorded in the final quarter of 2015, of 2.11 per cent.

Quarter-on-quarter, real GDP increased by 4.09 per cent, which partly reflects seasonal factors as well as a rise in the general price level.

For the full year 2016, the GDP contracted by -1.51%, indicating real GDP of N67,984.20 billion for the year. Nominal GDP was N29,292,998.54 million at basic prices in the fourth quarter of 2016, which represents year on year nominal growth of 12.97 per cent.

In contrast to real growth, this is 5.84 per cent points higher than the rate recorded in the same quarter of 2015, implying that the GDP deflator increased faster than the earlier period. For full year 2016, aggregate nominal GDP stood at N101,598,482.13 compared to N94,144,960.45.

During the period under review, oil sector contributed 8.07 per cent to the growth of the GDP with an estimated production of 1.90million barrels per day.

However, for the full year, oil production was estimated to be 1.833million barrels per day, compared to 2.13million barrels per day in 2015.

The reduction was largely due to vandalism in the Niger Delta region and as a result, the sector contracted by -13.65 per cent, a more significant decline than that in 2015 of -5.45 per cent which reduced the oil sectors share of real GDP to 8.42 per cent  in 2016, compared to 9.61 per cent in 2015.

The non-oil sector contributed its share of GDP to 92.85 per cent from 91.94 per cent in the fourth quarter of 2015.

Commenting on the report, Otunuga said, “Nigeria’s full-year economic contraction of -1.5% for 2016 continues to highlight how the terrible combination of depressed oil prices, foreign exchange shortages and overall sluggish economic fundamentals have exposed the nation to downside shocks. While the outlook for Nigeria still remains bearish in the short term, it must be kept in mind that markets have acknowledged that the nation is currently in the process of a critical structural transformation”.

He however, added that since the start of the year, the positive report of a successful Eurobond issue coupled with recent interventions from the CBN has bolstered investor risk sentiment towards the nation.

“It should be understood that Nigeria’s web of alternative foreign exchanges remains a major stumbling block to a sustainable economic recovery while also effectively repelling FDI. While recent reports of the CBN releasing an additional $180 million to the forex markets in an effort to ease business transactions may strengthen the Naira further, speculations are rife over the central bank devaluing the local currency to improve liquidity and regain more stability”.

 

 

 


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E-Financial

Lagos State Appoints MoneyMaster as Payment Partner for “Ounje Eko” Programme

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“Ounje Eko”, the food price discount initiative of the Lagos State Government, has appointed leading payment service bank, MoneyMaster Payment Service Bank Limited (MMPSB), as its collaborator in the bid to ensure ease of payments at the market.

MoneyMaster is one of the Central Bank of Nigeria-licensed Payment Service Banks (PSBs) to promote financial inclusion across Nigeria.

Under the partnership, MMPSB will apply its cutting-edge payment solution to engender easy payment and reconciliation in order to make   the experiences of Lagosians who will be getting their food supplies from the markets pleasurable. Its payment solution is also all-encompassing and ensures real time value to payment destinations.

The mobile bank was appointed as the collection and payment partner for “Ounje Eko” Food Markets programme which is a government initiative serving the five divisions of Lagos State. Consequent on this, MoneyMaster Payment Service Bank will collect payments in 57 LCDAs in the state.

The partnership gives credence to the quality of payment solutions that MoneyMaster is reputed for in its services to its growing business clientele in private and public sectors.

 


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CBN, EFCC Probe Banks, Firms over Alleged Forex Racketeering

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Central Bank of Nigeria (CBN), is investigating irregular foreign exchange transactions and forward contracts valued at approximately $2.4 billion.

CBN, EFCC Probe Banks, Firms over Alleged Forex Racketeering

The  inquiry follows an extensive audit by Deloitte, which scrutinized $7 billion in dollar debts accumulated under the bank’s previous leadership.

In the aftermath of the 294th Monetary Policy Committee meeting in Abuja, Yemi Cardoso, governor of CBN,  disclosed to journalists that the investigation, supported by the Economic and Financial Crimes Commission, among other security bodies, aims to clarify the legitimacy of these FX allocations identified as problematic by the audit.

“It was determined that a number of these transactions did not qualify…they were outright illegal. The law enforcement agencies are now looking into those transactions that as far as we are concerned, are not valid to be paid,” Cardoso detailed, emphasizing the unlawful nature of these forex deals.

The crux of the investigation lies in the audit findings that a significant portion of the scrutinized transactions lacked proper documentation and, in many instances, were deemed outright illegal.

However, the unfolding investigation has raised concerns within the organized private sector, with some entities contemplating legal action against commercial banks for unresolved forex bids.

Despite these tensions, Governor Cardoso reassures that the foreign exchange market remains open and transparent, inviting stakeholders to address their forex needs through the official channels.

Furthermore, Cardoso clarified the distribution of fertilizers to farmers as a one-off measure and not indicative of a shift back to direct interventions by the CBN, underscoring a commitment to strategic, regulatory governance rather than direct market involvement.

 

 

 

 

 

 

 

 


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CBN Urges Banks to Expedite Action on Recapitalisation

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Central Bank of Nigeria (CBN) has directed deposit money banks in the country to expedite action to increase their capital base from the current ₦25bn.

CBN Urges Banks to Expedite Action on Recapitalisation

Olayemi Cardoso, governor of CBN

Olayemi Cardoso, governor of CBN, stated this during the apex bank’s 294th meeting of the Monetary Policy Committee (MPC) on Tuesday in Abuja, when the MPC hiked the interest rate by 22.75% to 24.75%.

The apex bank chief said the MPC examined developments in the banking sector and expressed satisfaction that the industry remained stable. The committee, however, said to guard against risk, commercial banks in the country should accelerate their recapitalisation efforts.

Cardoso said, “The MPC also reviewed developments in the banking system and noted that the industry remains safe, sound, and stable. The committee thus called on the bank to sustain its surveillance and ensure compliance of banks with existing regulatory and macro-potential guidelines.

“The MPC also enjoined the banks to expedite actions on the recapitalisation of banks to strengthen the system against potential risks in an increasingly globalised world.”

 

 

 

 


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